Impending Debt Crisis

Floor Speech

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Mr. SCHWEIKERT. Madam Speaker, we are going to actually sort of walk through a couple things we did last week. We are going to do it again because I got the feeling no one was listening.

We had a joint economic hearing today, which, you know, I am blessed to be called the vice chair. We rotate the chairmanship back and forth between the House and the Senate. Have you ever had the occasion where in the hearing everyone knows the truth, but no one is allowed to actually say it out loud, and those of us who go and say it out loud sort of get fussed at? Well, as my father used to say to me: ``Screw them.'' We are going to actually have something unique around here. We are going to tell the truth.

First off, I had my heart broken. A Bloomberg reporter this morning broke my heart. I was listening to one of the news readers, and they go, well, the U.S. is going to default maybe in the beginning of June. Okay. Once again, someone go get your financial dictionary. Default is when you do not pay the interest on your bonds. Thirty percent of our spending is borrowed. That basically means 70 percent we have receipts, income, tax revenues. We have plenty of cash to cover the interest on our bonds.

Now, that doesn't mean there is not disharmony or unhappiness for that 30 percent that wants a check. If I hear one more idiot around here say we are going to have a default--that is not the definition of ``default.''

As a matter of fact, there used to be a Treasury Secretary under Lew, and he and I went around and around on this, and we finally came to an agreement that we would clean up our language. This would actually be default, not paying interest on your bonds, and we created this magic term called a technical default. That is when we don't send the check out to the worker for the agency or that goes out late. That isn't default.

The financial markets care about U.S. sovereigns having their consistent cash flow because the fact of the matter is that is the basis of much of the world economy.

We will never default even if you pass the debt ceiling. You have got to stop making things up around here.

I was going to bring in the charts of the cash flow and showing what happens in mid-June tax receipts and how there is a quarterly spike and may produce another 30 days and what other extraordinary measures have capacity, but I realize that no one is actually listening to the facts anymore.

So I thought we would try something else. If I get another person from the left who basically comes up and goes, we should have a clean debt ceiling. Really? Okay. Walk us through when you have controlled this body or you controlled the votes in the Senate, is that what you asked for? Well, the fact of the matter is, if we go back to 2017 when they didn't actually control the body but they had enough votes to extort things in the Senate, they required about $15 billion of additional spending, and they still voted against it.

How about 2019? Do you remember way back in 2019--although that was only a couple years ago--Speaker Pelosi said, I won't give President Trump that increase on the debt ceiling without raising the spending caps and a cash spend. So the cash spend was $324 billion plus functionally another $300 billion on that by raising spending caps. That is a clean debt ceiling?

Now, understand, what the Democrats wanted was more spending. They always want more spending. We are trying to bring some fiscal sanity, but come on. If there are any reporters out there, if there is anyone that wants to just sort of tell the basic story of how this place actually works, stop running around these hallways saying are you supporting default? Come on.

You know, you may be a hard-core leftist, but at least the public deserves some of the basic facts. We are in real trouble. We are in such real trouble.

Let's actually walk through this. Washington, D.C., Congress is almost incapable of adult conversation. I used to joke here that no one owns a calculator. When I speak to my little girl, who I want to be a math major, I tell her: ``Daddy works in a math-free zone.'' And she used to think that was funny until she started to realize it is probably true.

We are only willing to do hard things when there is a stressor. You have ended up here. You finished your budget appropriations. You are at the end of the year. You are trying to see, oh, we are just going to do a continuing resolution, which means we are going to spend tomorrow what we spent yesterday, but you have got to get a vote for that new authorization or we are up against the debt ceiling.

Remember, almost the only time this place has ever done something adult-like on policy in regard to spending debt deficits is when we have been up against debt limits.

How many times do we have to show these boards? How many of you remember Gramm-Rudman and then the next Gramm-Rudman and the Bush tax increases? Remember, those tax increases were part of a deal with the Democrats. In fact, when was that? Oh, 1991, 1992--actually, 1990. I can just read my board.

You look at these things. When there were major policy sets, they came because of a stressor, and that stressor was the debt ceiling. Yet maybe that is why the left is so terrified of an honest conversation here.

My latest calculation, if I go from the day President Biden was sworn in until now, my best calculation is we are borrowing about $51,000 a second during that time--$51,000 a second. Understand, in 9 years we are borrowing over $90,000 a second.

Do you understand the wheels are coming off? For some reason, my brothers and sisters on the left don't want to have an honest conversation about it. I don't know if they get votes or that is how they find love; they hand out trillions of dollars and they say crazy things like, well, the tax reform you all did in 2017. Even though by the fourth quarter of the next year tax receipts were higher than they were before the tax reform.

Yet, the bill they passed, their Orwellian named Inflation Reduction Act, you have seen the new scoring. They told the American people, oh, well, it will be under $300 billion of handouts to green energy. Fine. Okay. Lock that in. Instead, we now have, what is it, Goldman Sachs and others saying, nope, it looks like the number could be $1.2 trillion. Think about that. $1.2 trillion in direct sort of grants compared to tax reform in someone almost the same bracket of spending that was about growing the economy, bringing repatriation of businesses back. It was the fastest movement of economic growth during that economic period, closing of income inequality, food insecurity. We just have completely different visions of the world.

So one more time, some of us care so much about telegraphing to the markets. Remember, the world debt markets, we are borrowing so much money. That $51,000 a second, you know that adds up to like $4.5 billion a day every single day. We are consuming much of the borrowable lendable capital from the entire world.

We are chewing up so much of the world's capital that other parts of the world are slowing down because they don't have investment capital to build a new bridge or start a new business.

Do understand the scale of what the United States is doing. If we do not telegraph to those debt markets that are choosing to collect capital from your retirement to people from all over the world, if we do not telegraph to them that we are taking our debt seriously, do you expect someone to go buy a 30-year U.S. bond at what today is about 3.869 or something like that? I was looking at one of the postings earlier. You are going to buy a U.S. bond under 4 percent and believe you are going to get value for 30 years when the debt explodes? At the end of 30 years, U.S. sovereign debt is going to be close to $130 trillion.

What will inflation be like when you have borrowed that much money? The only way we would survive is you have to inflate like crazy, wipe out the value of all your savings, wipe out the value of that bond.

Let's go in the way-back-machine. In 2011, U.S. sovereign debt got a one-tick downgrade. Standard & Poor's came in and said, no, you guys are AA+. I remember the Biden administration just being enraged. How dare you do this?

A bunch of the folks, liars--excuse me--a number of the folks who wrote about it ran around saying, well, this is because of the debt ceiling. No, it wasn't.

If anyone reads--now, it is not just a letter. It is an entire report from Standard & Poor's. Some of the takeaways from it--because we did not provide a credible path that we were serious about taking on our debt.

The funny thing is, there is a paragraph in the report--remember, this is 2011. ``The political brinksmanship of recent months highlights what we see as America's governance and policymaking become less stable.'' This is 2011.

Do you think we are better off today? Do you think we are taking our debt more seriously today because, do understand, I think at that time we were at like $9 trillion, $9.5 trillion of borrowing. Today, we are $31 trillion. Are you telling me things are better today?

This is Standard & Poor's report from 2011. They downgraded United States debt because we did not take our debt seriously. We did not take seriously how we were going to manage it into the future.

Here we are, a decade-plus later, and things are dramatically worse. We have now hit the inflection period of baby boomers moving into their benefit cycle, and we have no way to pay for it.

We lie constantly because we are terrified to tell the truth. I will argue, and this is--I just wish I could get more of my brothers and sisters around here to make this argument.

It is not about the stressor of the debt ceiling. The ultimate stressor here is if we get downgraded. If the world starts to look askance at U.S. debt, saying, ``Well, we want a premium for buying their bonds because they are not taking it seriously,'' they are going to have to set off a huge inflationary cycle to devalue their dollar so, in the future, they are paying back that debt with devalued dollars.

You don't think we are going to walk into a downgrade? And do understand the law. There are lots and lots of laws around this country that this State pension system, this retirement system, you get two downgrades out of the three or four big rating agencies, and you get two of them, they can't even buy U.S. sovereigns. This is 2011. Things are dramatically worse.

You don't think that we are getting looked at on how unserious we are about--yet, once again, debt ceiling fights, stressors, however you want to politely phrase it, are the only time we have done something rational around here.

I don't know if I just need to buy the Financial Times or The Wall Street Journal or a Bloomberg subscription or something for my brothers and sisters on the left to read what is going on and understand that we are going to be punished unless we take this seriously.

Let's go back to some of the very basics. Why do we care so much about the debt and what is going on?

I have been using this same board, and I need to get an updated one. I just hate to spend the ink printing another one.

Ignore 1965. I need you look at--this is 2022. Take a look at this pie. Do you see right here the green? That is domestic spending. Do you see over here the blue? That is all of defense.

Understand, in 9 years, if you came to me and said: ``David, I need you to balance the budget in the 10-year window,'' in 9 years, you can get rid of every dime of defense, every dime of discretionary--let me define ``discretionary.'' ``Discretionary'' is functionally everything you think of government. It is the Park Service, the FBI, the White House, the Supreme Court, Congress. Maybe applaud for that. But all government is gone.

The only thing that is left is what we call mandatory. It is the benefits, your Social Security, Medicare, Medicaid. It is veterans' benefits.

Nine years, all government is gone as you know it. You still have to borrow a couple of hundred billion dollars, and in that same year, the Social Security trust fund is gone. In that same year, seniors take a 25 percent cut to their Social Security check. The immorality of this government--we just doubled senior poverty.

Yet, I had a President get behind that podium at the beginning of this year and basically say: Promise you won't talk about Social Security and Medicare.

He basically sentenced seniors in this country to doubling senior poverty because we are not--we are all running around here terrified to talk about it, yet it happened.

Go look at the CBO report, which is now functionally 8\1/2\ years, less than 9 years, that the Social Security trust fund is gone. If this inflationary cycle kicks up, and the COLA keeps as high it is, it could be gone in 8 years. At that moment, you double senior poverty.

That is the immorality the left is handing us, and they walk around here and pretend like they care. Care by your actions, not by your words.

It is almost a cultural difference we have between the right and left. We want to be judged by what we do, not by our virtue signaling, because you can't turn virtue signaling into policy.

Let's actually walk through it. I did this chart. It is really hard to read, but I will try to walk through it.

I do these floor speeches every week. I know I almost sound like an accountant on excessive caffeine, but at some point, the math always wins.

Let's actually walk through some of the inbound we get from people who will watch the video or talk about this. There is one woman who over and over says: If we just didn't have your wages, got rid of all the wages of Congress and your pension, we could balance the budget. You read it and you wonder, is it just an insane thought or someone who is off their meds?

Let's walk through some of these brilliant suggestions we get. We put it on this chart.

Get rid of all of the U.S. Congress and the Senate, too, plus the pensions and salaries. It is gone. You have basically covered 18 to 19 minutes of borrowing for an entire year--18 to 19 minutes of borrowing.

Let's look at a couple of the other favorites. Let's just get rid of every dime of foreign aid. Every dime of foreign aid is about 17 days of borrowing. That is in this last year.

Understand, by the end of this decade, it is no longer 17 days. It is basically, like, 9 days because the debt is going up so much because it is almost all healthcare, the growth of debt.

Last year, if we got rid of every dime of foreign aid, it would have gotten rid of 17 days of borrowing.

You may say, fine, if that is your policy--but you got rid of only 17 days of borrowing in an entire year.

What if we just got rid of all the 2017 tax reform and pretend it didn't change all the growth effects and all the companies that moved their book of business back to us and their IP and all of those things? This is one of the Democrats' favorite points: You should get rid of the 2017 tax reform.

Okay, look here. It takes care of 12 days of borrowing. Getting rid of the entire 2017 tax reform got rid of 12 days of borrowing. That is what this brain trust around here right now proposes to the American people.

You are lied to because we are terrified for you to understand how bad the math is. This goes on and on. We can actually do a 50 percent income tax. If you are in California, basically your State tax, if you are a higher income earner, you are in the 70s. Great. Love California.

A 50 percent income tax basically takes care of 5 to 5\1/2\ weeks of borrowing. It shows you how absurd many of these suggestions are.

One of my favorite ones is to go to a 70 percent income tax for people who make $10 million or more. It takes care of 5 days of borrowing.

Are you starting to get the point here that suggestions keep being thrown out and people pretend these are real? They are not. They are not.

The primary driver of our debt between today and 30 years from now-- you are approaching almost $120 trillion of debt 30 years from now. Seventy-five percent of that debt is the shortfall of Medicare. Twenty- five percent is if we take Social Security and backfill it.

It is demographics. We have 67 million of us who are baby boomers. Every day we wait, it gets dramatically more difficult to fix. I have an entire side here that cares so much more about winning the next election because we have lied to our voters for so long that if we get rid of waste and fraud and foreign aid, we will be fine.

Come on, look at the math. It is not hard math. Download the CBO reports. Download one of the Social Security actuary reports. They are not that hard to read. Stop making things up.

Here is the primary driver. I know this makes people upset when I show it, but it is the reality. I want to make sure people understand this board, the percentage of people age 65 or over relative to the prime working age. There is this whole body of economics that basically says, people between 25 and 65, those are their prime working years. That is their productivity years. When they pay taxes, new family formations--and I have done presentations on the collapse of family formation, which is just making a mess of our future economically.

How many are 65 and older as a ratio compared to those who are in their prime working age? You have to understand, we are already basically here. We are already crossing over to 40 percent of the population.

So, 40 percent will be 65 and older compared to the number of the population that is in the prime working age. That is the math. That population has earned benefits. We made a societal promise. We promised Medicare. We promised Social Security. Now, we have to figure out how to pay for it.

Understand, we are right here. In 2023, we are right now 38 percent. Looks like in 2028, in just a couple of years, we cross 40 percent. Then, as you start to get another 25 years, you are up to 46 percent of the population is 65 and older compared to how many you have in the prime working age.

This is a combination of baby boomers and the fact that fertility rates functionally started collapsing in the early 1990s, and we didn't want to talk about it.

Now, I am going to show the couple of boards that enrage people, yet the math has been vetted and vetted.

Board 1, this board now is already a couple of years old. I am just too cheap to print another board. It is not $116 trillion of borrowing. It is $128 million, almost $130 million. Seventy-five percent of the borrowing over the next 30 years, Medicare. Twenty-five percent of the borrowing is if we backfill Social Security, plus their interest costs.

The rest of the budget is calculated to have a positive balance, meaning if we hold discretionary for that 30 years, basically, in the formula that is already in law today--this is the law as it is today-- just the shortfall in Medicare is somewhere between $80 trillion to $90 trillion during that 30 years. Yet, I have had townhalls where I have asked, ``How many of you would raise your hand if I would just give you back every dime you put into Social Security and the dimes you put into the Medicare trust fund? Would you take that?'' A bunch of people raised their hands.

We should take that deal as a society because most people don't realize what the actual underlying math is. This is for a couple. Social Security, you would have made so much more if you had been allowed to put some of that money in the market. Let's be honest, AARP, the Democrats, and others back when George W. Bush proposed it went to war. They crushed the idea. Now, we are 20-some years later and look back and go: We were idiots for not actually doing it.

Your life would be dramatically more secure. Your retirement would be dramatically more secure if you hadn't given it to the trolls who fought it.

The basic math on Social Security, this couple will have paid $625,000. That is the mean over a 40-plus quarter work life. You are going to get back $698,000. What is that? A $72,000 SPIF you get.

You functionally get your money back from Social Security. It is not a great rate of return, but you get it back. However, what people don't understand is the primary driver of U.S. sovereign debt is Medicare. That couple will have put in about $161,000 into Medicare taxes.

The Medicare trust fund only pays 38, 40 percent of the Medicare bills. The rest comes right out of the general fund. You put in $161,000 in your work life--this is for the average couple--and you get back $522,000. This number has gone up dramatically because of medical inflation. We just haven't had the time to recalculate it. It is this differential right here that is the primary driver of U.S. sovereign debt.

I have done this in groups, and I get booed for the math. You get booed and go: But it is a calculator. It is math. Are we that terrified of the truth?

Understand, the wheels are coming off already. In the first 7 months of this fiscal year, entitlement spending is already up 11 percent. That is particularly driven because Medicare costs in the first 7 months of this year look like they have gone up about 16 percent because healthcare inflation really almost doubled the base inflation from all the spending the Democrats did when they were in charge. But last month's receipts, revenues, started to collapse. Capital gains taxes have crashed.

Now, understand, when we did the calculations last month, 7 months into this fiscal year, our costs on entitlements are up 11 percent, and our tax revenues are down 10 percent. That is why if you actually pull out the Treasury tables and read them and do the math and add them together, you are today heading toward a $1.7 trillion borrow. Assuming that the rest of the fiscal year is normalized, if it stays on that particular path, that number may be a few trillion dollars higher.

The reason I am talking about this is that we are hitting numbers of borrowing we weren't supposed to hit for another decade, decade and a half. There is this concept called fragility. Everything is fine and wonderful in life and our bonds, and everyone is willing to buy our debt until they are not. At that moment, you have that failed bond auction, the moment you actually have this starting to happen, where receipts are crashing and your costs are going up, the rest of the world sees that and says maybe we don't buy U.S. bonds this time.

The moment you hit that inflection, if U.S. rates for the next 25 years are 2 points higher than we had over the previous decade, at the end of that 25 years, every dime of tax receipts goes just to pay interest.

Do you want to know what default looks like? That is what default looks like. It is not the clown show we have around this place where people run around pretending their hair is on fire.

Madam Speaker, I am sorry. I know I was a little agitated. I have had far too much caffeine. This is important. We need to understand the math.

Madam Speaker, I yield back the balance of my time.

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